Fixed rate vs adjustable rate loans is typically one of the first questions new home buyers need to decide. When buying a home, most home buyers are presented with loan options including fixed rate vs. adjustable rate loans.
Though the right answer will depend on a variety of factors many people use the following rule of thumb: if you plan to refinance or move from your home prior to the time your adjustment period begins (all adjustable rate loans start off with a fixed rate for a term before becoming adjustable) and the interest rate is lower than the fixed rate loan you are being offered than you may want to consider the adjustable rate loans.
If you think you are going to stay in your home beyond the fixed-rate portion of your adjustable rate loan and do not plan to or think you will refinance before the end of the term, than you should consider fixed rate loans. There are other factors that go into determining whether you want fixed rate vs adjustable rate loans, however, that is a rule of thumb that many people use.
It is always a good idea to speak to your financial advisor or accountant before making major decisions including the type of loan you will take. They can help you decide the best loan type and how to resolve the issue of fixed rate vs. adjustable rate loans.
